Old vs New Tax Regime: Which Slabs Save You More Money?

Last Updated: June 2026 • By Tushar Gupta

Understanding your tax liability is crucial to maximizing your in-hand savings. With the recent updates in the Indian Union Budget, the New Tax Regime has become the default option and boasts lower slab rates along with a revised standard deduction. However, the Old Tax Regime remains attractive if you have significant deductions under Sections 80C, 80D, and 24(b).

1. Slabs at a Glance (FY 2024-25 / AY 2025-26 onwards)

The slabs differ significantly between the two systems:

New Tax Regime Slabs

Up to ₹3,00,000: Nil
₹3,00,001 - ₹7,00,000: 5% (Rebate available up to ₹7 Lakhs taxable income)
₹7,00,001 - ₹10,00,000: 10%
₹10,00,001 - ₹12,00,000: 15%
₹12,00,001 - ₹15,00,000: 20%
Above ₹15,00,000: 30%

Under the New Regime, a standard deduction of ₹75,000 is applicable for salaried individuals.

Old Tax Regime Slabs

Up to ₹2,50,000: Nil
₹2,50,001 - ₹5,00,000: 5% (Rebate available up to ₹5 Lakhs taxable income)
₹5,00,001 - ₹10,00,000: 20%
Above ₹10,00,000: 30%

Under the Old Regime, the standard deduction is ₹50,000.

2. Deductions and Exemptions Comparison

The main trade-off of the New Tax Regime is the sacrifice of deductions:

Section 80C (PPF, ELSS, EPF, LIC, NPS): Allowed up to ₹1.5 Lakhs in the Old Regime; completely disallowed in the New Regime.
Section 80D (Health Insurance): Allowed up to ₹25,000 (Self) / ₹50,000 (Parents) in the Old Regime; disallowed in the New Regime.
Section 24(b) (Home Loan Interest): Deductions up to ₹2 Lakhs for self-occupied properties allowed in the Old Regime; disallowed in the New Regime.
House Rent Allowance (HRA) & Leave Travel Allowance (LTA): Exempt in the Old Regime under specific calculations; fully taxable in the New Regime.

3. Finding Your Break-Even Point

The "Break-Even Point" is the level of deductions at which your tax under both regimes is exactly the same. If your actual deductions exceed this point, the **Old Tax Regime** is more beneficial. If they are lower, the **New Tax Regime** will save you more money.

For example, if your Gross Income is ₹12 Lakhs:

Under the New Regime, with standard deduction of ₹75,000, your net taxable income is ₹11,25,000. Your tax is approximately ₹82,500.
Under the Old Regime, to match or beat this tax rate, you would need deductions exceeding ₹2.62 Lakhs (such as ₹1.5L under 80C + ₹50K under 80D + HRA/Interest).

4. Summary Recommendation

Use our Income Tax Calculator to run side-by-side simulations of your specific salary components. As a rule of thumb:

Choose the New Tax Regime if you do not want the hassle of locking up your funds in long-term tax-saving investments.
Choose the Old Tax Regime if you are actively paying off a home loan or have rent structures (HRA) and investments totaling more than 30% of your gross salary.